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Thursday, March 25, 2010

Ind. Courts - Tax Court issues three yesterday

In Indiana Dept. of State Revenue, Inheritance Tax Div. v. Estate of Doris K. Parker, a 14-page opinion, Judge Fisher writes:

I. The necessity of an appraisal under Indiana Code § 6-4.1-4-1. The Department asserts that the probate court's resolution of the appraisal issue must be reversed because the Estate's inheritance tax return does not comport with the requirements of Indiana Code § 6-4.1-4-1. More specifically, the Department maintains that Indiana Code § 6-4.1-4-1, as clarified by 45 IAC 4.1-4-3, required the Estate to obtain an appraisal that was prepared by a licensed appraiser and then file the appraisal with its inheritance tax return. * * *

This statute, by its own terms, does not require the Estate to obtain an appraisal valuing its assets at their fair market value nor does it require the Estate to file such an appraisal with its inheritance tax return.

Nevertheless, the Department explains that in interpreting the statute, it promulgated 45 IAC 4.1-4-3, which requires “a formal appraisal by a licensed appraiser.” The Department argues that its regulation should be afforded “the force of law” because it clarifies the statutory requirements (but neither adds to those requirements nor extends the Department's powers) According to the Department, its regulation simply “ensures [that] the [E]state's statutorily-required submission of fair market values is substantiated.” The Court, however, must disagree.

“This Court has often stated that what a statute does not say is just as important as what it does say.” Haas Publ’g Co. v. Ind. Dep’t of State Revenue, 835 N.E.2d 235, 238 (Ind. Tax Ct. 2005) (citation omitted), review denied. If the legislature had intended for the Estate to substantiate its own opinion as to the fair market value of its assets by attaching an appraisal to its return, it would have stated as much. Instead, the legislature only required the Estate to “indicate” the fair market value of its property as of the “appraisal date prescribed under IC 6-4.1-5-1.5[.]” * * *

Accordingly, the probate court did not err when it held that Indiana Code § 6-4.1-4-1 did not require the Estate to file an appraisal with its inheritance tax return.[1] [ILB - Footnote 1 on p.9, which states, in part "The Department's arguments, however, are not only jaded, but are misplaced as well." is worth reading.] * * *

II. The valuation of the family farm under Indiana Code § 6-4.1-6-12. The Department also asserts that the probate court erred in holding that only the value of the life estates were subject to inheritance tax. According to the Department, the entire fair market value of the family farm, as valued in accordance with Indiana Code § 6-4.1-2-4, was subject to the tax because that was what Doris transferred to her children when she died. The Department is correct. * * *

Conclusion. For the above stated reasons, the probate court's holding as to Issue I (the appraisal issue) is AFFIRMED; the probate court's holding as to Issue II (the valuation issue), however, is REVERSED. The Court therefore REMANDS the case to the probate court for calculation of the proper amount of inheritance tax and interest due from the Estate, consistent with this opinion.

In Indaina Dept. of Revenue v. The Estate of Marjean M. Ogle, a 6-page opinion, Judge Fisher writes:
In a case handed down simultaneously with this one, this Court has held that Indiana Code § 6-4.1-4-1 “by its own terms, does not require [an e]state to obtain an appraisal valuing its assets at their fair market value nor does it require [an e]state to file such an appraisal with its inheritance tax return.” Indiana Dep’t of State Revenue, Inheritance Tax Div. v. Estate of Parker, Cause No. 49T10-0812-TA-72, slip op. at 6 (Ind. Tax Ct. March 24, 2010). Consequently, it was not improper for the probate court to reject the Department’s argument that the Estate’s appraisal was “insufficient” in this case.
Ronald O. Guingrich v. Allen County Assessor (NFP) - "This Court has previously explained that when a taxpayer offers probative evidence, it must be dealt with in some meaningful manner and not ignored. See Canal Square Ltd. P’ship v. State Bd. of Tax Comm’rs, 694 N.E.2d 801, 805 (Ind. Tax Ct. 1998). In this case, the Indiana Board offered no explanation as why it disregarded the majority of Guingrich's evidence. Consequently, the Court cannot say that Indiana Board's final determination is supported by substantial evidence." Reversed.

Posted by Marcia Oddi on March 25, 2010 12:25 PM
Posted to Ind. Tax Ct. Decisions